Welcome back to the Bidenomics Brief from the Roosevelt Institute.
Read the Bidenomics Brief on our website ([link removed])
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This week, we cover President Biden’s new supply chain efforts, and the relationship between the new approach to economic governance and the Supreme Court. As the president pushes to manage supply chain problems and rebalance the economy, the Supreme Court challenges the right of the public and our elected officials to limit corporate power.
The Reblancing.
** Supply unchained
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Last week, the president rang in the holiday season by announcing a new Council on Supply Chain Resilience, along with 30 other executive actions ([link removed]) intended in part to bring down the cost of goods. The actions included direct investments to reduce supply chain bottlenecks, as well as a focus on monitoring the supply chain, sharing data, and preventing further disruptions. President Biden described the effort to strengthen supply chains and keep the shelves stocked as one part of an overall plan to lower costs, while at the same time calling on corporations to lower their prices: “Let me be clear to any corporation that has not brought their prices back down, even as inflation has come down, even as supply chains have been rebuilt—it’s time to stop the price gouging,” Biden said
([link removed]) .
While the new supply chain plan is unlikely to have an impact on shoppers’ holiday plans, it is another good example of the administration’s shift toward industrial policy as a key tool in the public policy toolkit. Of particular note, the president will use the Defense Production Act (DPA) to authorize the Department of Health and Human Services to enable investment in domestic manufacturing of essential medicines, including a $35 million investment to produce “key starting materials for sterile injectable medicines.” As of earlier this year, there were 309 ongoing drug shortages ([link removed]) in the US—the highest in nearly a decade. The shortages, which include over-the-counter drugs and prescription medications for ADHD, cancer, diabetes, and RSV, amongst others, are caused in some cases by increases in demand, as well as disruptions to the supply chain as a broader
result of the pandemic.
Under the terms of the DPA, the president’s plan deems the investments in these inputs for medicines “as essential to the national defense.” Last year, Roosevelt Institute Director of Industrial Policy and Trade Todd Tucker wrote a brief ([link removed]) outlining how the DPA provides the president with many options for using industrial policy to shift production toward and manage production within key sectors. As Tucker notes, “The end result of [the amendments to the DPA] is a conception of ‘national defense’ that goes far beyond the military battlefield and into almost every nook and cranny of the economy.”
Despite this statutory authority, in the era of trickle-down economics, it would have been considered beyond the pale for the federal government to directly involve themselves in producing basic inputs that would unblock a supply chain bottleneck. But, in the new era of industrial policy, the administration is investing in the production of an early input into the manufacturing process, as part of a broader whole-of-government effort to facilitate overcoming supply chain issues. This is what it looks like for the administration to begin reasserting the central role of government in shaping markets and resolving market failures, rather than leaving it up to the corporations who run the market to solve on their own.
Some Like It Hot.
** A supreme problem for Bidenomics
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The biggest threat to the fledgling successes of the new economics doesn’t necessarily come from House conservatives. In fact, their robed friends across the street may pose an even greater threat.
The Roberts Court has aggressively asserted its right to overturn acts of Congress and ignore precedent, public opinion, and concerns about its legitimacy. While the highest profile examples of the court’s overreach may not concern political economy, the court has been comparably expansive in its defense of corporate power, and similarly damaging to many issues long considered to be settled law.
The court has already heard this term a case on the constitutionality of the Consumer Financial Protection Bureau (CFPB), and a case against the Securities and Exchange Commission (SEC), both designed to strike a blow to the power of independent agencies to check corporate power on our collective behalf. The court’s decision in June to overturn the administration’s student loan plan has already cost 43 million people over $400 billion ([link removed]) . Later this year, the court will ([link removed]) hear cases on what is known as “Chevron deference,” in which courts defer to agencies in their interpretation of federal law. If Chevron is reversed, it would deal another hammer blow to the regulatory state.
Just this week, the court heard yet another case ([link removed]) on the power of the federal government, this time on the government’s ability to levy taxes on income. At stake in the case, US v. Moore, is the Mandatory Repatriation Tax, a tax on the income corporations earn abroad and send back to the United States. The outcome of the case is not a mere legal abstraction; according to Niko Lusiani ([link removed]) , the director of the corporate power program at the Roosevelt Institute, upending the tax could put $271 billion in the hands of 400 large corporations. During oral arguments, justices across the ideological spectrum sounded skeptical about following the petitioners’ radical theories to create chaos in the tax code. But the mere fact that the Roberts Court has the unchallenged ability—in this or future cases—to rewrite the tax rules to benefit the wealthy poses
distinct and direct challenges to our ongoing democratic experiment.
The Roberts Court’s judicial overreach is incompatible with an economy that’s based on people, not corporate power. The new approach to economic governance depends on a strong and active state and on the ability of the people, in and through our elected representatives, to check the power of corporations. The Roberts Court has the power to undo taxes and regulations against corporations, and undermine the right of elected representatives and labor unions to fight back. This has implications for the economy and for the shift in approach we seek. Anyone who cares about rebalancing power and wealth in the economy—including the Biden administration itself—must get serious about curbing the power of the Supreme Court.
** A difficult climate
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* In the Financial Times ([link removed]) , read about how Wall Street is continuing to prefer fossil fuel investments over clean energy.
* Liza Featherstone has a piece in The New Republic on how the New York Power Authority, a public agency created by Governor Franklin D. Roosevelt in 1931, is plugging the clean energy gaps ([link removed]) left by private finance.
* Alex Press has a story in Jacobin about UAW’s big year ([link removed]) , and their preparation for an even bigger one next year.
* In the Verge, read about how tens of billions of dollars of IRA funding will now be earmarked for environmental justice ([link removed]) .
** Jury’s still out
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As you know by now, we close every week with a quote from either President Biden or FDR. Hit reply to this email to let us know your guesses for who said this week’s quote. If you guessed last week’s quote ([link removed]) was from President Biden, you were right! It came from his Labor Day speech ([link removed].) this year.
Now for this week’s quote:
“But since the rise of the modern movement for social and economic progress through legislation, the court has more and more often and more and more boldly asserted a power to veto laws passed by the Congress and state legislatures in complete disregard of this original limitation. In the last four years the sound rule of giving statutes the benefit of all reasonable doubt has been cast aside. The court has been acting not as a judicial body, but as a policymaking body.”
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